There was quite a reaction to my piece the other day about the failure of the Draft Energy White Paper to take into account the technology – solar (be it PV or thermal) that most global analysts and energy bodies think may dominate the global energy market in the next couple of decades.
If the multi-decade forecasts (solar to provide a maximum of 3 per cent energy by 2050) could be excused for a misplaced decimal point, or simply the reliance on outdated modelling of technology costs, the prediction for 2030 – a maximum 2,000MW – was inexcusable. All the authors had to do was to read DRET’s own press releases.
From the Office of the Energy Regulator they would learn that solar PV in Australia is already at 1.4GG as at the end of 2011.
From the Solar Flagships program, they would have learned that there are 400MW to be constructed in Round 1, and likely a further 600MW in round 2.
From the Renewable Energy Demonstration Fund, they would learn that there is a 44MW solar booster being built in Queensland and a 40MW Big Dish project in South Australia.
And then they would have learned that the department has recently recommitted to providing $75 million for a planned 102MW CPV plant in Mildura, built by Silex Systems.
That makes 2,200MW off the bat, by 2020, without taking into account any more rooftop PV (probably at least another 2GW on its own, and likely double that), the ACT solar auction (40MW in next few years, possibly extending to 200MW), the impact of the Clean Energy Finance Corp, and other projects such as the 10MW PV plant in Geraldton, to be the first utility scale solar plant in the country, and possibly not the last. Private analysts are fairly consistent in predicting between 5GW and 10GW of solar in the country by 2020.
If this sounds impressive, it needs to be put into a little context. Tim Buckley, investment manager at ArkX, compiled this list below of large scale solar projects currently proposed in the US and China alone. These do not include the dozens and dozens of projects between 5MW and 100MW, and other large scale projects in the Middle East and north Africa.
China, in particular, is moving very fast,” he says. “Only 12 months ago projects in China were 5-20 MW each, more demonstration scale utility projects. Today, they are looking at 50-100 MW plus, and now there are three 1-2 GW multi-mega projects in planning (China Windpower, China Longyuan and First Solar).
First Solar – under construction, PPAs in place,
- Topaz, California 550 MW
- Sunlight, California, 550 MW
- Agua Caliente, Arizona 290 MW
- AV Solar Ranch One 230 MW
- Copper Mountain 2 Nevada 150 MW
- Stateline California 300 MW (NEW)
- Silver State South Nevada 250 MW (NEW)
Sunpower – under construction, PPAs in place,
- California Valley Solar Ranch, California, NRG Energy, and SunPower is the EPC, 250 MW
- Ivanpah Solar, NRG Energy is the PPA, BrightSource Energy and Bechtel doing EPC, solar thermal power, California, 392 MW
- Rio Mesa Solar Electric Generating, California, BrightSource Energy, 750 MW solar thermal (NEW)
- Hidden Hills Solar Electric Generating System, California, BrightSource Energy, 500 MW solar thermal (NEW)
K Road IPP
- Calico Solar – Phase I, California, Southern California Edison, 275 MW (NEW)
- Calico Solar – Phase II , California, Southern California Edison, 575 MW (NEW)
- Moapa Solar, Nevada, no PPA as yet, 350 MW (NEW)
- Genesis Solar Energy Project, California, NextEra Energy, 250 MW solar thermal
- Sonoran Solar Energy Project, Arizona, Nextera, 300 MW (NEW) approved in Dec 2011 (NEW)
- McCoy Solar Project, California, NextEra, 750 MW (NEW)
Other huge US projects that are advanced (all NEW)
- Nevada, Korea Mildland Power Co & Posco, 300 MW
- Solana Generating Station, Arizona, Arizona Public Service signed the PPA, Abengoa Solar is the EPC, 280 MW
- The Blythe Solar Power Project, California, developed by Solarhybrid/Solar Millennium’s subsidiary Solar Trust of America in a JV with Chevron Energy Solutions, 968 MW – under financial threat
- The Mesquite Solar project, Arizona, owned by Sempra Generation, 150 MW
- Desert Harvest solar project, enXco is doing the EPC, no BLM approval as yet, 100 MW.
- Mount Signal Solar Farm / Imperial Valley, California, BLM approved, 600 MW.
- The Centinela Solar Energy Project, California, BLM approved in Dec 2011, no PPA, 275 MW.
China National-wide grid-connected PV projects in Qinghai (all NEW)
- 300 MW Phase 2 PV power generation project at Xitie Mountain by CGNPG
- 300 MW PV power project in Ge’ermu by Qinghai Hydropower(Group) Co., Ltd.
- 200 MW PV power project of China Longyuan Power Group Corporation Limited
- 100 MW China Technology Solar Power Holdings, PV power generation project in Golmud
- 200 MW SDIC Huajing Power Holding (Golmud), PV power generation project in Golmud
But enough on solar. Back to the EWP and some of its numbers for Australia’s number one energy source, black coal. And it seems that while its take on solar is unduly pessimistic, it’s take on coal is at the other end of the spectrum.
As David Mitchell, the CEO of X-Energy, points out, modeling for the Draft Energy White Paper conducted by Acil Tasman, anticipates a surprisingly low cost of coal, and even declining capital costs of coal-fired plants over the next two decades – the percentage capital cost fall in black coal plants is almost as great as the anticipated cost falls in PV. This goes against most scenarios.
Indeed, it appears that Acil Tasman is assuming that the NSW generators will continue to enjoy a substantial benefit from sourcing coal at a subsidized price. In some scenarios, it assumes they will not pay any more for coal in 2030 than they do under subsidized arrangements now. i.e. a cost of around $37/t – around one third of the current export price.
This presumably assumes that mines such as Cobbora will be delivering some 30 million tonnes of coal a year at cost to the generators. That would imply a yearly subsidy of between $2 to $3 billion, and may even defy the real costs – the proposed Alpha Coal mine in the Galilee Basin, for instance, predicts cash costs of $58/t, and reckons it will be in the cheapest quartile of producers.
Mitchell suspects that there is a fair element of “group think” among the consultants called on to provide modeling for government departments. The problem he faces, as he tries to interest the mining community in new technologies and proposals for hybrid energy sources, and to slowly wean them off expensive diesel and other fossil fuels, is that many of the people he is talking to rely on such forecasts. “We talk to the mining sector and try and get them to think differently about energy. But they are conservative, and very risk averse, and modeling like this doesn’t help.”